Pre-deposit in VAT appeal must reflect a prima facie case; mechanical deposit orders are inconsistent with the statutory scheme.

Section 73(4) of the Gujarat Value Added Tax Act, 2003 treats tax proof as the normal condition for entertaining an appeal, but its proviso allows the appellate authority to accept a lesser deposit or security for recorded reasons. That discretion must be exercised judicially on the facts of the case, and the forum should consider whether the appellant has made out a strong prima facie case before insisting on pre-deposit. A mechanical demand for a large deposit without addressing that aspect is inconsistent with the statutory scheme. The pre-deposit direction was therefore not justified, and the appeal was restored for hearing on merits.

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Issues: Whether the insistence on pre-deposit while entertaining the second appeal was justified, and whether the Tribunal was required to consider the appellant's prima facie case before directing deposit.

Analysis: Section 73(4) of the Gujarat Value Added Tax Act, 2003 makes proof of tax payment the ordinary condition for entertaining an appeal, but the proviso empowers the appellate authority to admit the appeal on payment of a smaller sum or on security for recorded reasons. That discretion has to be exercised judicially on the basis of the circumstances of the case. At the stage of deciding pre-deposit, the appellate forum is expected to examine whether a strong prima facie case is made out, and a mechanical insistence on a large deposit without addressing that aspect is inconsistent with the statutory scheme.

Conclusion: The insistence on pre-deposit without considering the appellant's prima facie case was not justified. The order directing deposit was liable to be set aside and the appeal restored for hearing on merits.

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